South Korea to Pilot Digital Currency with 100,000 Citizens

South Korea is preparing to launch a groundbreaking project involving digital currency as part of its efforts to modernize its financial infrastructure. The program, set to begin in the fourth quarter of 2024, will involve 100,000 citizens in a pilot designed to lead to the nationwide implementation of digital currencies.

In this pilot program, 100,000 South Korean citizens will be able to use deposit tokens based on the country’s central bank digital currency (CBDC) in a program jointly managed by the Bank of Korea (BOK) and financial regulators. This program was announced following a visit by Agustin Carstens, the General Manager of the Bank for International Settlements. The project is based on the BOK’s intentions to conduct real-world experiments with CBDCs, initially revealed in October.

Participants in the pilot program can use deposit tokens to purchase goods and can be recruited starting around September to October of the following year. The project is expected to last for three months, but participants are currently limited in the uses of the digital currency, only able to use it for intended payment purposes.

Technological experiments will also be conducted, including collaboration between the BOK and Korea Exchange to test the integration of CBDC into a simulated system for carbon emissions trading, focusing on the feasibility of transactions between carbon emissions rights and payment tokens.

South Korea’s ‘Digital Won’ Revolution

The BOK has acknowledged that the digital currency has the potential to overcome challenges faced by existing government voucher systems, including high transaction fees, slow settlement processes, limitations in post-transaction verification, and concerns about fraudulent claims. The project has been praised for its forward-thinking approach to future monetary systems, and South Korea’s successful simulated tests in December 2021 position it as a significant player in the global shift towards digital currencies.

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Major cities like Jeju, Busan, and Incheon are likely pilot locations, paving the way for transformative impacts on everyday transactions and future financial innovations.

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By Team